405 views

S-REITs underperforming due to interest rates, inflation: CGS-CIMB

The FSTREI declined 16% year-to-date.

Rising interest rates and inflation headwinds downgraded Singapore Real Estate Investment Trusts’ (S-REITs) performance on the stock market, CGS-CIMB.

Share prices of S-REITs were the worst in October 2022, after declining 15% year-to-date. It experienced impacts from strong rate hikes on stubbornly high inflation outlook.

“With the sharp surge in interest rates, there was a faster than expected rise in interest costs of 20-50bp qoq in 3Q22,” said CGS-CIMB.

It is seen that the rate upcycle is closer to an end and cost pressures are easing, which may affect S-REITs performance in the medium term.

“The recovery in SREITs is expected to be uneven, with those with strong balance sheets and low gearing likely to emerge from the environment faster,” CGS-CIMB said. 

The top picks for the S-REIT sector are CICT and CLAR. 

The risks include a longer and higher than projected rate hike environment, which could mean further earnings downward revisions.

Potential benefit for this sector is a faster than expected decline in interest rate environment, which could lower SREITs' cost of capital and moderate funding costs.

Follow the link for more news on

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!